Can I hire my kids and put them on payroll?
Short answer
Yes, if your kids do real work for your creator business, like appearing in content, filming or editing, you can pay them a reasonable wage. The business deducts it, and your child often owes little or no income tax on it.
Otavio Mayole, Co-founder, DeCypher FinancialsUpdated
How it can save:
- The wage is a business expense for you.
- Your child's earned income up to the standard deduction generally isn't subject to federal income tax.
- If your business is a sole proprietorship, or a partnership owned only by you and your spouse, wages to children under 18 are generally exempt from Social Security and Medicare tax. If your business is an S-Corp, payroll taxes apply.
- Earned income lets your child fund a Roth IRA.
What makes it hold up:
- Real work that fits their age. A teenager editing videos counts. A toddler doesn't.
- A reasonable wage for the work, close to what you'd pay someone else.
- Timesheets and a description of what they did.
- Payment from the business account into an account in the child's name.
- Proper payroll and year-end forms.
This is one of the strategies we look at on Creator. Every family's situation is different.
These are not guarantees. Every creator's situation is different.